The Internal Revenue Service (IRS) has officially announced a major technological shift for withholding agents and financial institutions. In a bulletin released on March 3, 2026, the IRS confirmed that the Information Returns Intake System (IRIS) is now open for the electronic filing of Tax Year 2025 Forms 1042-S.
This announcement marks the beginning of the end for the legacy Filing Information Returns Electronically (FIRE) system. For compliance officers, tax professionals, and financial institutions managing FATCA and Chapter 3 withholding, this transition requires immediate attention.
Here is a breakdown of what the IRS announcement means for your current tax year filings and how to prepare your institution for the mandatory cutoff.
1. The Current Landscape: A Parallel Transition PeriodRight now, the IRS is operating both the IRIS and FIRE systems simultaneously. However, there are strict rules on who can use which system for the current reporting season.
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U.S. Filers: Eligible U.S.-based withholding agents and filers can now use IRIS to electronically file their Tax Year (TY) 2025 Forms 1042-S (Foreign Person's U.S. Source Income Subject to Withholding).
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Foreign Filers (FFIs): Foreign Financial Institutions submitting TY 2025 Forms 1042-S are not yet eligible to use IRIS. You must continue to route your submissions through the legacy FIRE system.
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Prior Tax Years: If you are filing late returns or correcting Forms 1042-S from TY 2024 or earlier, these must also continue to be filed via the FIRE system.
The most critical takeaway from the IRS bulletin is the impending retirement of the FIRE system for 1042-S reporting.
The IRS explicitly stated that beginning with Filing Season 2027 (which covers Tax Year 2026 Forms 1042-S), IRIS will become the only system available for electronically filing these information returns.
Financial institutions have roughly one year to upgrade their internal processes, test IRIS integration, and ensure their reporting software is fully compatible with IRIS data formatting standards. Waiting until Q1 2027 to navigate the new IRIS registration processes—which requires obtaining a Transmitter Control Code (TCC) specific to IRIS—is a massive operational risk.
3. How to Prepare Your Compliance Team TodayThe IRS is actively encouraging filers to review IRIS requirements immediately. Here is what your compliance team should prioritise:
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Understand IRIS TCC Requirements: An IRIS TCC is entirely separate from your legacy FIRE TCC. If you plan to file via IRIS (or if you are a foreign filer preparing for next year), you must apply for an IRIS-specific TCC through the IRS e-Services portal.
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Audit Your Software Vendor: Does your current tax reporting software support IRIS schema formats? The shift from FIRE to IRIS involves different data structuring rules. If you are relying on outdated manual macros, now is the time to migrate to an automated solution.
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Standardise Your Data Collection: Whether you are dealing with Chapter 3 withholding or complex FATCA compliance, your underlying data must be impeccable. Ensure your payee data, Foreign TINs, and U.S. Indicia are actively audited year-round.
As the IRS modernises its data intake, your institution's compliance technology must keep pace. Relying on outdated filing tools or manual data formatting exposes your business to unnecessary rejections and penalties.
At Novus Compliance, we stay ahead of regulatory technical shifts so you don't have to. Our compliance engine ensures that your data is perfectly mapped, validated, and formatted for whatever gateway the regulator demands—be it the IRS IDES portal for FATCA XML, the new IRIS system, or localised global portals.
Stay Ahead of the Curve:
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Navigating multiple global portals? Read our Ultimate Global FATCA & CRS Reporting Guide to see how IRS requirements compare to the UK, Canada, and the UAE.
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Ensure your entity data is standardised by downloading our 2026 Reporting Excel Templates.
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Contact Novus Compliance today to learn how our software simplifies Form 1042-S, FATCA, and CRS reporting.
